McGarry & Sons, Inc. v. Constr. Resources One, L.L.C.
107 N.E.3d 91
Ohio Ct. App.2018Background
- CR-One hired painting subcontractor Mike McGarry & Sons, Inc. (MMS) to clean, prime, and paint Phase I of a large vacant facility; parties executed a written subcontract for $118,340 (a not-to-exceed price) with a written change-order procedure.
- MMS began work before the fully executed contract and unilaterally changed cleaning/priming methods, later seeking roughly $85,400 in extra costs and additional quotes for later phases.
- MMS submitted payment applications totaling nearly the contract price (with 10% retainage unbilled), then recorded a mechanic’s lien claiming last work on November 22, 2013 and asserting a lien on February 5, 2014.
- Owner Cuyahoga Heights (co-owned with CR-One’s principals) claimed the lien was untimely and that MMS returned in November without authorization to extend lien rights; owner’s lender required bonding, causing owner damages.
- Trial court dismissed most MMS claims pretrial, denied leave to amend to add fraud, found MMS breached no enforceable agreement for extras, found MMS filed an invalid (late) lien and ruled for owner on counterclaims (fraud, tortious interference), and sanctioned MMS; appeal followed.
Issues
| Issue | Plaintiff's Argument (MMS) | Defendant's Argument (Appellees) | Held |
|---|---|---|---|
| Motion to amend to add fraud claim | MMS timely sought leave once facts surfaced and pleaded misrepresentations (promises to "take care" of extras) | Motion untimely, prejudicial, and proposed fraud allegations lacked particularity and were contradicted by record | Denial affirmed: fraud allegations insufficiently particular and untimely; no abuse of discretion by trial court |
| Validity/timeliness of mechanic's lien | Lien timely because last work occurred Nov. 22, 2013 (painter returned to touch up) | Last performance was Oct. 31, 2013 (payment application); Nov. work was unsolicited/repairs to extend lien → lien filed Feb. 5, 2014 was late | Trial court erred to grant summary judgment dismissing foreclosure (factual issue existed whether Nov. work legitimately extended completion), but bench trial later supported finding lien invalid; dismissal ultimately harmless on appeal |
| Owner counterclaims (fraud and tortious interference) | Owner relied on lien affidavit and suffered damages; MMS knew of owner's lender, intended interference | Owner cannot show detrimental reliance on the lien statement nor that MMS knew of lender relationship | Reversed in favor of MMS: owner failed to prove reliance for fraud and failed to show MMS knew of or intended to interfere with bank relationship; owner’s $63,570 award vacated |
| Breach of contract / change orders / waiver | MMS argues scope changed and change-order requirement was waived, permitting recovery above the contract price | Written subcontract unambiguously defined scope and required written change orders; no written change orders and no clear, convincing evidence of waiver | Affirmed for defendants: contract limited recoverable compensation to the written price absent written change orders; waiver not proven |
| Sanctions for frivolous conduct | MMS disputes frivolous finding and sanctions | Trial court found frivolous conduct but no final sanction amount entered | Not ripe for review: trial court found frivolous conduct but no sanction amount imposed; assignment of error not sustained at this time |
Key Cases Cited
- Wayne Bldg. & Loan Co. v. Yarborough, 11 Ohio St.2d 195 (Ohio 1967) (mechanic's lien statutes remedial and protect contractors; construed strictly)
- Crock Constr. Co. v. Stanley Miller Constr. Co., 66 Ohio St.3d 588 (Ohio 1993) (mechanics' lien rights are in derogation of common law and strictly construed)
- Grafton v. Ohio Edison Co., 77 Ohio St.3d 102 (Ohio 1996) (de novo standard on appellate review of summary judgment)
- Harless v. Willis Day Warehousing Co., 54 Ohio St.2d 64 (Ohio 1978) (three-part summary judgment standard under Civ.R. 56)
- Dresher v. Burt, 75 Ohio St.3d 280 (Ohio 1996) (party opposing summary judgment must present specific facts showing genuine issue)
- Anderson v. Liberty Lobby, 477 U.S. 242 (U.S. 1986) (defining materiality and genuine issue concepts for summary judgment)
- Foster Wheeler Enviresponse v. Franklin Co. Convention Facilities Auth., 78 Ohio St.3d 353 (Ohio 1997) (change-order clauses enforceable; waiver requires clear, convincing evidence)
- Galmish v. Cicchini, 90 Ohio St.3d 22 (Ohio 2000) (parol evidence rule prohibits contradicting an unambiguous written agreement)
- Eastley v. Volkman, 132 Ohio St.3d 328 (Ohio 2012) (manifest-weight standard and appellate review of bench-trial factual findings)
- Russ v. TRW, Inc., 59 Ohio St.3d 42 (Ohio 1991) (elements of common-law fraud)